Well howdy! From time to time, somebody walks into my office with a sad story about how they ended up owing the IRS so much that they feel like they will never be able to pay it off.
Believe it or not, there are some ways to settle your tax debt with the IRS for pennies on the dollar. It’s called “Offer In Compromise” or OIC for short.
Basically, in order to apply to the IRS for having them reduce your outstanding debt to a smaller amount that you can pay off immediately, you must meet certain criteria.
You must have all your tax returns timely filed or the current year on a timely filed extension. So if you have any returns unfiled in at least the last seven years, they must be prepared and filed.
Good news, if you have any refunds coming in the last three years, they will be applied against the balance owed to the IRS. If you have refunds coming from older than three years ago, it is forfeited to the IRS without being credited against the other amounts owed to them. If you have any balance due, no matter what year, that will be added to the other amounts you owe them.
If you’re unable to clearly show that the amount you owe cannot be paid given your current earning capacity, assets, liabilities, etc. then you should request a payment plan. Under the payment plan rules, you must pay off the entire debt in five years, so make sure you can afford the monthly payments under that.
To determine if you are eligible to make an OIC to the IRS, go to https://irs.treasury.gov/oic_pre_qualifier/faces/OIC_Screen1.jsp and fill out the simple questions. Warning, understand that the IRS is asking for monthly amounts, not annual, when answering income and expense questions. At the end, the website will actually compute your OIC and tell you how to fill out certain forms to submit.
If you need help, go as far as you can, then take what you have into a professional tax preparer. When selecting a tax preparer to help you with the OIC, keep in mind that the higher up you go, the more experienced in handling OICs you will get. (Thus, probably do not go to an H&R Block-type preparer.)
It can take several months before the IRS responds, which will usually be a phone call from an IRS agent to go over your application for an OIC and most often, they will decide to approve or deny your offer right there on the phone call. Be prepared to pay the amount they are willing to settle for right away. No long-term payment plans for OIC.
Did you hear? Ecclesiastes 5:5 says, “It is better that you should not vow than that you should vow and not pay.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.
-->Well howdy! From time to time, somebody walks into my office with a sad story about how they ended up owing the IRS so much that they feel like they will never be able to pay it off.
Believe it or not, there are some ways to settle your tax debt with the IRS for pennies on the dollar. It’s called “Offer In Compromise” or OIC for short.
Basically, in order to apply to the IRS for having them reduce your outstanding debt to a smaller amount that you can pay off immediately, you must meet certain criteria.
You must have all your tax returns timely filed or the current year on a timely filed extension. So if you have any returns unfiled in at least the last seven years, they must be prepared and filed.
Good news, if you have any refunds coming in the last three years, they will be applied against the balance owed to the IRS. If you have refunds coming from older than three years ago, it is forfeited to the IRS without being credited against the other amounts owed to them. If you have any balance due, no matter what year, that will be added to the other amounts you owe them.
If you’re unable to clearly show that the amount you owe cannot be paid given your current earning capacity, assets, liabilities, etc. then you should request a payment plan. Under the payment plan rules, you must pay off the entire debt in five years, so make sure you can afford the monthly payments under that.
To determine if you are eligible to make an OIC to the IRS, go to https://irs.treasury.gov/oic_pre_qualifier/faces/OIC_Screen1.jsp and fill out the simple questions. Warning, understand that the IRS is asking for monthly amounts, not annual, when answering income and expense questions. At the end, the website will actually compute your OIC and tell you how to fill out certain forms to submit.
If you need help, go as far as you can, then take what you have into a professional tax preparer. When selecting a tax preparer to help you with the OIC, keep in mind that the higher up you go, the more experienced in handling OICs you will get. (Thus, probably do not go to an H&R Block-type preparer.)
It can take several months before the IRS responds, which will usually be a phone call from an IRS agent to go over your application for an OIC and most often, they will decide to approve or deny your offer right there on the phone call. Be prepared to pay the amount they are willing to settle for right away. No long-term payment plans for OIC.
Did you hear? Ecclesiastes 5:5 says, “It is better that you should not vow than that you should vow and not pay.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.